Bonavista Announces a Reduction in Monthly Dividends, Closing of a Synergistic Deep Basin Acquisition, Confirmation of the 2013 Capital Budget and Increased Production Guidance

Bonavista Energy Corporation announces that its Board of Directors has approved a reduction in the monthly dividend from $0.12 per share to $0.07 per share, beginning with the payment due February 15, 2013 to common shareholders of record on January 31, 2013, with an ex-dividend date of January 29, 2013.

Despite encouraging signs of recovery in the fall of 2012, North American natural gas fundamentals have deteriorated significantly since that point. Driven by widespread technological success in the development of natural gas from unconventional reservoirs, the price curve for North American natural gas has shifted materially lower over the past two years. To compound this natural gas supply imbalance, a similar phenomenon has been evolving with the supply of natural gas liquids and crude oil. Unfortunately, producers in western Canada have been exposed to unusually high differential pricing for their product resulting from insufficient export alternatives. The western Canadian oil and gas business will continue to experience excessive pressure throughout 2013 until structural adjustments are realized.

Forward commodity prices are below a level that provides adequate cash flow to sustain our prior monthly dividend, capitalize on our numerous opportunities, and maintain a strong balance sheet. Notwithstanding the implementation of several initiatives to preserve our prior dividend throughout 2012, current forward commodity prices do not allow for these activities to continue under our “dividend plus growth” business model. The long-term goal of this business model remains intact with a commitment to generate an attractive return for our shareholders through a sustainable balance between dividends and corporate growth.

To deliver on this model, Bonavista embarked upon a strategy five years ago to assemble a concentrated portfolio of assets in highly prospective, multi-zone areas that will create maximum value for our shareholders. The approach was to extract incremental value by enhancing both capital and operating efficiencies through control of operations, consolidation and the development of low-risk, scalable opportunities. We have validated our commitment to this strategy over the past twelve months illustrated by acquiring two synergistic assets in our Deep Basin area, and by divesting of numerous non-core properties that were unable to compete for capital allocation. This acquisition and divestiture activity, coupled with our concentrated exploration and development efforts will result in the allocation of greater than 90% of the 2013 capital budget in two areas: the Deep Basin and West Central areas of Alberta. Complementing this focused acquisition and development activity, Bonavista will continue to optimize its asset portfolio and is currently in the process of marketing additional non-core assets for sale with a bidding process due in February 2013.

Today, Bonavista”s asset base and drilling inventory is of the highest quality it”s been since inception of the company. We have improved the capital efficiency of our key development plays and we continue to find ways to add discipline to our cost structure. Most importantly, we have an experienced, entrepreneurial team driven by profitability and results.

Synergistic Deep Basin Acquisition

Bonavista today completed another synergistic acquisition in its Deep Basin area for a closing purchase price of $72.5 million. This acquisition is consistent with our strategy of acquiring high quality, multi-zone oil and liquids rich natural gas assets in a region proximal to existing operations where we have identified opportunities to optimize netbacks through lowering operating costs and utilizing proven technology to enhance the value of existing reservoirs.

Highlights of the acquisition include:

Increases our land position in the Deep Basin by approximately 18% (40,000 net acres) providing an excellent overlay with our existing land position;

Increases production by 2,450 boe per day (77% natural gas weighted) of low decline production with the capability of increasing production by 350 boe per day by the end of January 2013 through the completion of an existing Rock Creek horizontal well;

Increases our development portfolio by 19 gross (17.2 net) horizontal drilling locations, nine of which are targeting a Rock Creek light oil pool. This pool is currently underdeveloped with less than a 2% recovery factor to date, producing at a 15% decline rate. Four horizontal wells will be drilled in this pool in 2013;

Adds two wholly-owned natural gas plants with approximately 24 mmcf per day of capacity and 130 kilometers of infrastructure augmenting Bonavista”s existing operational presence in the area. This alignment of operations will result in a 25% reduction in the current operating costs of these properties;

Adds $20.5 million in net operating income in 2013 with the capability of growing substantially in future years; and

Collectively, acquisition metrics are attractive at $29,600 per boe per day, $12.00 per boe, including future development costs and 3.5 times 2013 cash flow based on forward commodity pricing.

2013 Capital Budget and Upwardly Revised Production Guidance

Bonavista”s 2013 net capital spending plans remain consistent with prior guidance at $423 million; however, we have incorporated certain budget adjustments to accommodate approximately $20 million of development expenditures allocated to the Deep Basin properties we have just acquired. We expect our 2013 capital program will result in average production of between 73,500 and 74,500 boe per day representing a modest increase over prior guidance and resulting in 6-7% growth over 2012. Similarly, we expect our 2013 year-end debt to forward 2014 cash flow ratio to improve to 2.0:1 based on current strip commodity pricing.

Through the consistent application of our proven strategy, we are confident that the current measures we are taking will not only result in additional financial flexibility in the short-term but lead to a stronger and more profitable company in the long-term. As in prior years, we will continue to monitor the economic landscape, commodity prices and our drilling results and adjust our capital spending levels as conditions warrant. Additionally, we remain attentive to an increasing number of incremental acquisition opportunities which complement our core regions and enhance our capabilities to create value.

Forward Looking Statements

Corporate information provided herein contains forward-looking information. The reader is cautioned that assumptions used in the preparation of such information, particularly those pertaining to cash dividends, production volumes, commodity prices, operating costs and drilling results, which are considered reasonable by Bonavista at the time of preparation, may be proven to be incorrect. Actual results achieved during the forecast period will vary from the information provided herein and the variations may be material. There is no representation by Bonavista that actual results achieved during the forecast period will be the same in whole or in part as those forecasts.